Russian President Vladimir Putin chairs a meeting with members of the Security Council to discuss additional security measures for Crimea after clashes on the contested peninsula, at the Kremlin in Moscow, Russia, Thursday.

Along the border of Ukraine and disputed Crimea, tensions are rising – again.

Ukraine put its troops on high alert on Thursday, one day after Russian president Vladimir Putin accused Ukrainian agents of engaging in “terror” attacks against infrastructure in the city of Armyansk, near the border with mainland Ukraine, according to CNN.

The Federal Security Service (FSB), Russia's principal intelligence agency, claimed that Ukrainian commandos had twice attempted incursions into the Crimean peninsula, killing a Russian soldier and an FSB agent in the process, according to the BBC. It also said that it had detained several Ukrainian military intelligence agents who were part of a Crimean network.

On Wednesday, Mr. Putin vowed a tough response to the incident, and the Kremlin said that he had met with his security council to consider “anti-terrorist security measures at the land border, in the waters and in the airspace of Crimea,” according to the Guardian.

Ukrainian president Petro Poroshenko denied that the attacks had taken place, calling them a “fantasy” designed as a pretext for military escalation.

“Russian accusations towards Ukraine of terrorism in the occupied Crimea sound as preposterous and cynical as the statements of the Russian leadership about the absence of the Russian troops in Donbass (region of Ukraine)," said Mr. Poroshenko, according to Reuters.

NPR notes that the United States appears to be backing Ukraine’s account, with US ambassador to Ukraine, Geoffrey Pyatt, saying it "has seen nothing so far that corroborates Russian allegations of a Crimea incursion."

Since the March 2014 referendum on Russia’s annexation of Crimea, Putin has sought to further legitimize Russia’s claim to the peninsula – rejected by much of the West – through new infrastructure projects. On the second anniversary of the annexation, Putin trumpeted the construction of a bridge between the peninsula and Russia as part of a “historic mission” dating back to Tsarist Russia, saying it would lay the basis for future economic growth, reported Reuters then.

But it has proven difficult for Putin to take Crimea from war footing to the sort of stable ground normally necessary for economic growth.

“It seems to me that it’s going the other way,” says Mark Katz, a professor of government at George Mason University, where he specializes in Russian politics. “In fact, he’s taking it back to a war footing and I think it’s in part because he can’t develop it. If your economic plans don’t materialize, it must be someone else’s fault.”

In March, Eurasian political experts Melinda Haring and Alina Polyakova of the Atlantic Council wrote in Newsweek that the economic situation in Crimea had grown “desperate” in the two years following the annexation, blaming a fall in tourism and sanctions that restrict access to the economies of Ukraine and the West. Infrastructure projects – from a national data center to power plants – have run into complications stemming from those sanctions.

Human rights groups have noted a climate of “fear and repression” in Crimea brought by the arrival of the Russian military, and fighting between the Ukrainian government and Russian-backed separatists has heated up again in the eastern part of Ukraine.

But Russia may also be turning to its military as a driver of its civilian economy, not just as a means of securing claims over territory. In late June, deputy prime minister Dmitri Rogozin announced that the defense industry would become the main engine of the Russian economy by 2020, according to Sputnik News, a news agency owned by Russia's government. And just this week, Russia and India announced that they would collaborate on a joint investment center in the Crimean port of Sevastopol, an important naval base.

“We can’t tell for sure what the economy would be like [without sanctions],” Dr. Katz told the Monitor. “What [Putin] can’t get is the West to accept his annexation in Crimea. That’s the thing he can’t get us to do.”